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Chipotle Mexican Grill, Inc. (CMG), BJ’s Restaurants, Inc. (BJRI): What Happens When These Growth Stories Stop?

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Over the past several years, we have witnessed some explosive growth stories unfolding in the restaurant sector. A handful of restaurants are crushing the market.



CMG data by YCharts

These restaurants are growing by expanding their chains faster than many competitors. Yet this growth causes investors to wonder: “When will these chains stop expanding, and what happens when they do?”

Past growth

Chipotle Mexican Grill, Inc. (NYSE:CMG)To fully appreciate the growth, we need to consider where each company has come from. Both Chipotle Mexican Grill, Inc. (NYSE:CMG) and BJ’s Restaurants, Inc. (NASDAQ:BJRI) speak for themselves.

Company Locations 2006 Current Locations Increase
Chipotle Mexican Grill 570 1,502 164%
Panera Bread (NASDAQ:PNRA) 1,027 1,673 63%
The Cheesecake Factory (NASDAQ:CAKE) 131 174 33%
BJ’s Restaurants 55 131 138%

Panera Bread Co (NASDAQ:PNRA) is a steady grower — opening on average two new restaurants a week for the past 6+ years. These locations average almost $1.3 million in annual revenue. By opening around 100 per year, Panera Bread Co (NASDAQ:PNRA) increases revenue annually by more than $100 million.

The Cheesecake Factory Incorporated (NASDAQ:CAKE) is the slowest grower in this bunch. While slower than the others listed here, each of its locations is a money-making machine. In the most recent quarter net income per location was $145,356. Compare that to Chipotle Mexican Grill, Inc. (NYSE:CMG), which generates $58,490 per location per quarter. Management is willing to grow a tad slower to ensure that each location performs to these high company standards.

Future growth

These growth stories still have a bright future. No exact growth target has been given by Chipotle Mexican Grill, Inc. (NYSE:CMG)’s management, but many believe the company is targeting at least 3,000 locations — double today’s number.

BJ’s Restaurants, Inc. (NASDAQ:BJRI) is targeting 425 locations — more than triple the current count. One unique growth aspect to this company is its “clustering strategy.” Basically, by choosing one geographic region to expand into, the company can save money on marketing and infrastructure. This year the company will expand into the mid-Atlantic region (Virginia and Maryland) for the first time to start a new cluster of restaurants.

While no firm restaurant targets exist for Panera or The Cheesecake Factory Incorporated (NASDAQ:CAKE), it is reasonable to assume that both of these chains can continue expanding as well. Panera hasn’t even touched the idea of expanding internationally… yet. It is only logical to assume that at some point it will consider it. On its end, the Cheesecake Factory is just starting to expand internationally, with deals in place in the Middle East and Latin America.

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